Family firms and homeland production: reasoning from agency theory and socio-emotional wealth theory

Abstract

Agency theory and socio-emotional wealth theory are central when explaining family firm advantages. However, research has not uncovered the extent to which reasoning from these two theories can also explain family firm advantages linked to the homeland production mode. This paper addresses this issue, building on the above-mentioned theories through an illustrative single case study of the family firm Weibel Scientific. The case study stresses that characteristics of family firms can be exploited in the homeland production mode and lead to reduced agency costs and social capital benefits. Furthermore, the case study highlights that there are important aspects to consider regarding the way in which these characteristics affect agency costs and social capital, and how these effects are influenced by the production locational mode. From this, it is concluded that arguments from agency theory and socio-emotional wealth theory can explain family firm advantages associated with the homeland production mode.